In Mega Merger, AT&T to Buy T-Mobile USA!

March 20th, 2011 by · 8 Comments

Apparently T-Mobile USA really was for sale, but it wasn’t Sprint that stepped up to the plate.  Instead, Ma Bell’s grandchild is doing the buying, taking yet another step back toward its dominant position.  AT&T (NYSE:T, news, filings) announced on Sunday its intention to buy the American mobile arm of the German incumbent for $39B.  The combination of #4 and #2 will easily restore AT&T’s position as the largest mobile carrier in the USA.  That is, it will if regulators can be persuaded to sign off on the deal.

Speculation lately had been about a combination of T-Mobile USA and Sprint, or possibly some sort of deal with LightSquared for an LTE buildout.  However, the Sprint combination has always had all sorts of internal contradictions that if nothing else lowered the price the third place mobile carrier could pay for a deal to be viable.  And the LightSquared possibility would have required major, new, long term investments in North America — something we all know DT has been balking at for a long time.  A deal with AT&T has more synergies, but will be harder to float at the FCC.

AT&T gets more than size out of this though, they get a stronger foothold in ‘4G’ in the form of T-Mobile’s HSPA+ footprint.  That will lessen the pressure to build out LTE too fast and give them an answer to Verizon and Sprint/Clearwire.  They can then focus on ‘real 4G’ a bit further down the line.  It will also relieve the endless iPhone focus by giving everyone a different story to talk about.

So everybody’s happy, right?  AT&T gets bigger and DT gets out at what is probably the best price they could manage.  But I think there is probably going to be substantial pushback from the regulatory side on this one.  Even if opponents can’t stop the deal, look for them to use it as leverage on the network neutrality front.

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Categories: Government Regulations · ILECs, PTTs · Mergers and Acquisitions · Wireless

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8 Comments So Far

  • anon says:

    now if vz and new att merge, we can go back to ma and forget about all of this competition stuff. Rob, do you have any other hobbies ? 🙂

  • Justin says:

    So, with this action in play does this revive a Level 3/Sprint move of some sort???

    • Rob Powell says:

      It definitely stirs the pot vigorously, and may provoke some sort of response from both Level 3 and Sprint. But I’m not sure yet just what those responses will be.

  • DW says:

    is this going to impact the Nokia Siemens Networks deal with LightSquared ? Is Sprint more or less likely to cut in on NSN now ? Will NSN still be doing the LightSquared network build-out ?

  • Bill A says:

    I was one of those who owned Voicestream(which had bought Omnipoint) stock which was bought by DT. Is there any dollar figure as to what DT has spent building this business and whether they made money @ $39Billion take out price??

  • Anon says:

    Could CenturyLink’s next move be a play for a wireless carrier? Makes more sense than Level3 aquiring Sprint.

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